Foreign real estate investment is slowly returning to the U.S. According to a recent report from the National Association of Realtors, foreign buyers purchased 98,600 properties totaling $59 billion from April 2021 through March 2022. This is an 8.5% increase from the previous year, stopping a three-year skid in foreign investment in U.S. residential real estate.
"For the second year in a row, restrictions and general caution tied to international travel during the pandemic slowed home buying by wealthier foreign buyers," said NAR Chief Economist Lawrence Yun. "Even so, domestic home buying demand was exceptional and, therefore, boosted home sales nationally."
NAR's 2022 Profile of International Transactions in U.S. Residential Real Estate, which surveys members about transactions with international clients who purchased and sold U.S. residential property during the given time period, found the average ($598,200) and median ($366,100) home sales prices among international buyers were the highest ever recorded by NAR – and 17.7% and 4.1% higher, respectively, than the previous year. At just over $1 million, Chinese buyers had the highest average purchase price, and nearly a third (31%) purchased property in California.
China and Canada remained first and second in U.S. residential sales dollar volume at $6.1 billion and $5.5 billion, respectively, continuing a trend going back to 2013. India ($3.6 billion), Mexico ($2.9 billion), and Brazil ($1.6 billion) rounded out the top five.
For the 14th straight year, Florida remained the top destination for foreign buyers, accounting for 24% of all international purchases. California ranked second (11%), followed by Texas (8%), Arizona (7%), and New York and North Carolina, tied at 4%.
All-cash sales accounted for 44% of international buyer transactions. Nearly seven out of 10 Canadian buyers (69%) made all-cash purchases, the highest share among foreign buyers, followed by Chinese (58%), Mexican (27%) and Brazilian buyers (26%).
"Due to rising interest rates, overall home sales will decline in the U.S. this year. Foreign buyers, however, are likely to step up purchases, as those making all-cash offers will be immune from changes in interest rates," Yun added. "In addition, international flights have increased in recent months with the lifting of pandemic-related travel restrictions."
With this expectation, now is a good time for Realtors to work toward earning a NAR Certified International Property Specialist designation, said Atsuko Yube, chair of the Silicon Valley Association of Realtors Global Business Council. CIPS designation courses provide training in international business issues, including currency conversion, cultural awareness, legal and tax requirements, transaction principles of international real estate, and specifics about the real estate markets in Europe, the Americas, and Asia.
"We had very good attendance in the virtual CIPS courses offered by SILVAR this year from Realtors from the San Francisco Bay Area and other parts of California, and from Arizona, Florida, Chicago, Ill., and Texas," said Yube. "The U.S. is still considered a safe haven by many foreigners due to political unrest in some countries and given the current global uncertainty. We anticipate more foreign buyer presence in Silicon Valley now that there are no further restrictions to enter the U.S.," said Yube.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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